The Smart Export Guarantee: What is it & How Does it Work?

Let’s take a closer look at the Smart Export Guarantee, which suppliers offer it, and how much income it can generate.

What is the Smart Export Guarantee?

The Smart Export Guarantee (SEG) is the mechanism by which energy suppliers pay their customers for any excess energy they generate after powering their homes. The Smart Export guarantee, like its predecessor the Feed in Tariff, allows households to save even more money on their energy bills by producing their own carbon-neutral energy.

The Smart Export Guarantee is widely available from a range of suppliers of all shapes and sizes. While it is administerd by suppliers, it is overseen by the energy watchdog Ofgem, who ensure that it’s always worth your while to use the SEG.

Who is the SEG for?

The SEG is for pretty much anyone who generates their own renewable energy via green home investments like:

• Photovoltaic (PV) solar panels.
• Domestic wind turbines.
• Domestic micro hydropower.
• Biomass energy from Anaerobic Digestion (AD).
• Micro-combined heat and power (Micro-CHP).

If you generate your own energy but are still connected to the National Grid, you can benefit from the SEG.

Of course, a lot of the energy that’s generated is weather dependent, and will fluctuate depending on the amount of wind or sunlight you get. But the truth is that whenever the amount of energy you generate is in excess of your use, you’re automatically pumping energy into the grid for free.

If you’re going to do this, you might as well get paid for it!

And you can count on the folks at Papernest to make sure that you get paid well for it.

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How does the SEG work?

The SEG is (thankfully) fairly straightforward. When you set up a new SEG arrangement with your energy supplier (or any other of your choosing), they become your SEG Licensee.

A licensee is required to pay for the electricity exported by your installation (i.e. wind turbine, PV solar panels etc.). They also have a responsibility to report all installations listed on the agreement to Ofgem.

As an SEG Licensee, your supplier has autonomy over the terms of the agreement, such as the length of the contract and unit rates paid to you per kWh. As such, the SEG is less uniform than its predecessor the Feed in Tariff and there is a great deal of variety from one suppliers’ SEG to the next.

The rates that energy companies pay is related to the cost of wholesale energy. Indeed, prices can, theoretically, drop below zero. The good news is that Ofgem ensures that tariffs always remain above zero under the SEG, regardless of the state of wholesale costs.

In other words, it’s always worth your while to have the SEG.

How long do Smart Export Guarantees last?

Smart Export Guarantee agreements are much shorter and more flexible than their predecessors. Most SEG licensees offer their customers a rolling 12 month contract. This is good, as it means you can switch licensees as rates fluctuate. Which is likely to happen as more and more suppliers offer them and the market grows more competitive.

However, it’s important to remember that Ofgem does not place specific restrictions on licensees in terms of unit rates and tariff lengths. Make sure you know how long you’ll be expected to stay with a licensee before you commit to an agreement.

What are SEG Payments?

These are the payments that your supplier makes to you in return for the energy that you feed back into the grid. Unlike its predecessor the Feed in Tariff, the SEG has only one type of payment.

What is the difference between generation tariff and export tariff?

These are the different types of tariff offered under a Feed in Tariff and are not applicable to the SEG. A generation tariff is a payment for the total amount of electricity generated, which is calculated per unit. An export tariff is a payment for the units of electricity that are pumped back into the National Grid. This is estimated to be 50% of the amount that is generated.

How often will I receive my SEG Payments?

That depends on the specifics of your agreement, as different licensees offer different terms. In most cases, payment cycles are every 3 months, while some licensees make payments every 6 months.

What is the difference between the Smart Export Guarantee and Feed-in Tariff?

The SEG is functionally similar to its predecessor the Feed in Tariff in most ways. However, there are a number of ways in which the two differ.

The most noticeable is that the rates offered for Feed in Tariffs are a little higher than those offered by the SEG. However, the SEG is far more flexible, as FiTs are very lengthy agreements that often last between 20 and 25 years. Of course, you can switch energy suppliers as many times as you like within this time period, and your agreement will remain the same, whether you use the FiT or SEG.

Finally, unlike the FiT, the SEG has only one type of payment. There are no generation and export tariffs with the SEG.

How Much Can You Make Selling Energy Back to the Grid?

At papernest, we specialise in helping energy consumers to save money on their energy. But getting your energy supplier to pay you... well, that’s the dream, isn’t it?

So, just how much money can you expect to make with the SEG? Unfortunately, that’s not an easy question to answer. There’s such huge variance in unit rates between SEG agreements. Looking at current market rates, your tariff could net you anywhere between 0.5p and 5.5p per kWh. So it’s really important to do your research.

But don’t worry, the Papernest team have done all the heavy lifting for you...

Which companies have the best Smart Export Guarantee tariffs?

We know that the profitability of the SEG depends greatly on the licensee and agreement. So, which energy supplier offering the best Smart Export Guarantee tariffs? Let’s take a look.

At the time of writing, these are the most up-to-date at the start of 2021…

Battery-specific SEG tariffs

Octopus Energy also has a separate tariff that it offers in conjunction with Tesla. This pays more favourable rates (as much as 8p-11p/kWh). However, it is contingent on the provision that you use a specific storage battery in your setup. This will make it impossible to switch agreements as long as you are using it, so you are locked in for longer.

How much could I earn with solar panels and the Smart Export Guarantee?

There are over 800,000 PV solar panels in use on rooftops all over the country. If you’re thinking of applying for the SEG, there’s an excellent chance that you have a solar array at home.

As such, you may be wondering how much you could expect to earn with a combination of solar panels and the Smart Export Guarantee.

There are a lot of variables at play here, from your choice of licensee to how much sunshine you get in your area. People in Truro, for instance, are likely to get more sunshine than people in the Lancashire dales. Nonetheless, we can help you to calculate an estimate of how much money you could make.

How can I estimate my SEG?

If you opt for a high-paying SEG tariff that doesn’t require the use a specific battery, thereby affording you more freedom, you can to make as much as £109 per year in SEG payments. Let us show you how we estimated this.

For starters, we’re assuming that you generate around 3,000 kWh of electricity per year, 50% of which is fed back into the grid.

Remember that your gains will be supplemented by the amount you save by virtue of being less reliant on grid energy.

The chart below provides an insight into your prospective gains and savings combined.

Which suppliers offer SEG Tariffs?

Since the Smart Export Guarantee replaced the Feed in Tariff, it has become a legal obligation for larger energy suppliers to offer Smart Export Guarantees to all customers that generate their own energy and do not currently have a Feed in Tariff in place.

As such, all of the "Big 6" energy suppliers (who provide around 70% of the UK’s energy between them) offer SEG agreements.

The "Big 6" are:

• British Gas
• Scottish Power
• SSE
• EDF
• E.On
• N Power

There are also a number of smaller green and independent energy suppliers that also offer the Smart Export Guarantee on a voluntary basis, even though they are not legally required to. These suppliers include:

• Avro Energy
• Bristol Energy
• Social Energy
• Bulb
• Good Energy
• Octopus
• OVO (who own SSE)
• Shell Energy
• Social Energy
• Utility Warehouse

As the Smart Export Guarantee becomes more ubiquitous and more energy consumers start to generate their own low-carbon energy, we can expect more and more suppliers to offer SEG agreements, thereby making the market (and rates) more competitive.

Types of Smart Export Guarantee tariff

There are two types of SEG agreement. These are fixed-rate and flexible-rate. This is not to be confused with a fixed-rate and variable-rate energy tariff. Let’s take a look at the difference:

Fixed-rate

The unit rates paid to you remain the same per kWh no matter when you export energy to the grid. Most of the SEG agreements offer this kind of tariff, and it’s a good way to ensure that your gains will be predictable.

Flexible-rate

Flexible-rate tariffs, on the other hand, pay varying amounts based on the value of the energy at the time when you export it. So, you could potentially get more for generating energy during peak load hours when demand is highest.

What happens to my Smart Export Guarantee if I change supplier?

Nothing. Your SEG agreement is independent of your energy tariff. It remains in place no matter how many times you switch suppliers. And because the SEG is more flexible than the FiT, the Papernest team can keep directing you to the best SEG licensees year after year!

How do I claim my Smart Export Guarantees?

Claiming your SEG tariff is mercifully easy.

When your equipment is up and running and the Papernest team have helped you to choose a licensee, all you need to do is fill in a simple application form. This form will vary depending on your licensee, however, it will most likely ask you to provide the following:

• A Smart Export Meter reading.
• MCS certificate and proof of ownership (for installations below 50kW).
• Proof of grid connection, proof of ownership, and proof of commissioning (for installations over 50kW).

Submit your application form and your new licensee will get you up and running.

What do I need to qualify for the SEG?

As long as your installation is based in the UK and has a maximum capacity of 5MW, (up to 50kW in the case of micro combined heat and power), you are eligible to apply for the SEG.

Can I receive SEG tariffs and RHI payments simultaneously?

If you already receive payments from the Domestic Renewable Heat Incentive, you may worry that this will preclude you from being able to take advantage of a SEG tariff. Rest assured that you can receive SEG and RHI payments simultaneously. So it’s a good idea to apply for both as soon as you’re up and running.

What If I already receive FiT payments?

If you already receive Feed in Tariff payments, you’re locked into a contract that typically lasts for decades. However, most FiTs do offer a yearly opt-out. Is it worth ditching your FiT for the SEG?

In all honesty… no.

At least for the time being.

Even the most advantageous SEG rates on the market are less generous than what you’re likely getting at the moment with your FiT. Perhaps when the SEG market grows more competitive and rates start to climb it may be worth considering using your opt-out.

Let Papernest find the perfect SEG agreement for your needs today

If you’re already generating renewable energy, you ned to start getting paid for what you’re already feeding into the National Grid as soon as possible. Fortunately, as well as helping you to find the perfect energy tariff for your needs, the Papernest team can also help you to find the perfect SEG agreement.

If you’re ready to start supplementing your energy savings with the best possible rates, we can help!

Call the team today on 0330 818 6225.

We’re available from 8am to 6pm.

Would you like to know more about saving money on energy bills? Great! Check out these related articles

1. Government energy grants
2. Utility Bills
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FAQ

Can I get a Smart Export Guarantee tariff?

If you’re generating your own low-carbon energy and don’t currently have a Feed in Tariff in place, you can and should get a Smart Export Guarantee tariff. All you have to do is choose an energy supplier / licensee and fill in a brief form. All you need to qualify is to have a UK-based installation with a maximum capacity of 5MW.

Which companies have Smart Export Guarantee tariffs?

All of the “Big 6” energy suppliers have Smart Export Guarantee tariffs, and it is a legal requirement for them to do so. But there are also a number of smaller suppliers that also offer the SEG. You can see a full list and table of rates above.

I already get the FIT. Should I change to SEG?

If you already have a Feed in Tariff in place, you’ll likely find that the rates you’re currently getting compare favourably to anything you could get with the SEG. Even if you signed up to an agreement with market-leading rates.

Can I sell my Feed in Tariff?

Under the terms of your Feed in Tariff, you may still be responsible for the tariff after you move to a new home. In theory, you could move your installation to your new home and retain your tariff. But in most cases this is impossible or at the very least impractical.

Your Feed in Tariff usually transfers to the new owner of your home. So while you can’t sell it on directly, it does add value to the property and therefore offsets your initial investment when you set it up.

You’ll need to talk to your supplier to transfer the tariff to your home’s new owner.

Am I eligible for SEG payments if I received a government grant for the installation?

Yes, absolutely! Even if you got government help for your installation you can still benefit from Smart Export Guarantee payments. Again, you’re feeding energy into the grid anyway. Why shouldn’t you get paid for it?